Q&A: The future for Setanta

But what would this mean for the broadcaster, its customers and those sports which have sold television rights to Setanta?

I am a Setanta subscriber. If it goes into administration, would all coverage stop?

It is too early to say for sure - and the firm is not talking.

One prospect is that the administrator continues to run the company as a going concern - broadcasting as normal - in case an investor can be found.

When ITV Digital collapsed in 2001, administrators took six months to see if they could work out a deal with rights' holders, during which time the broadcaster continued to operate as normal. The broadcaster's rights were eventually bought by BSkyB.

However, it is possible that Setanta's output would be halted - and presumably payments from its 1.2 million subscribers would stop with it.

What about the television rights that Setanta has bought?

If the firm breaches its contract with the Premier League - for example by missing payments - it is likely that the rights will revert to the league for them to resell.

Setanta's current Premier League TV deal has one more season to run. Sky could pick up one of Setanta's two Premier League packages for the 2009/10 season (which each include 23 games) - but it is barred from buying both under competition rules.

Walt Disney's ESPN TV network has previously considered bidding for Premier League rights as part of its strategy to expand internationally, and is seen as potential bidder.

It would be very hard to replace Setanta at anything like the rates they are paying currently

Other potential bidders could include ITV, Channel 4, the BBC and Channel 5, according to media analysts.

From 2010/11, Setanta is only due to be showing one Premier League package of 23 games per season. Again, these rights would have to be resold.

So is the Premier League going to miss out on cash?

For the current TV deal, investor guarantees mean that the Premier League will receive its payment for the 2009/10 season - so there should be little impact on the revenue of clubs.

However, beyond that, analysts think it is unlikely that the Premier League could match the £159m Setanta paid for the right to screen 23 Premier League games over three seasons from 2010/11.

Given the widespread tendency to spend on new players, wages and stadium developments on the basis of projected earnings - this could leave clubs with a deficit on their balance sheets.

Is it only Premier League football that would be affected?

No. According to an estimate by Citibank, Setanta pays about £85m annually for rights for the Scottish Premier League, the Football Association (England games and the FA Cup), boxing and the US PGA tour.

Setanta is facing a battle for survival

These rights would be resold and, given the economic climate, the rights costs would "more than halve", according to Citibank analyst Marc Sugarman.

This would affect how much cash filtered down to different sports - from top level to grass roots.

Professor Tom Cannon, an expert on sports financing from Liverpool University, told the Financial Times: "It would be very hard to replace Setanta at anything like the rates they are paying currently.

"The ripples from the disappearance of Setanta would spread very broadly."

Setanta's current four-year deal negotiated alongside ITV to broadcast FA Cup and England international matches runs until July 2012.

The BBC understands that under the terms of the contract, ITV is obliged to pick up Setanta's eight remaining England home friendly matches at a pre-arranged reduced price should the broadcaster fail.

The FA Cup may be more problematic, but it is understood the FA would approach ITV in the first instance to see if it wants to take over any live games. If ITV was not interested, it would approach other broadcasters - both terrestrial and subscription.

How did the price of sports broadcasting rights get so high?

The price of desirable rights such as the Premier League and top-flight rugby has risen largely because Sky wants to keep its audience, and so it is prepared to pay top dollar to secure the best events which are so central to its business.

Setanta wanted coverage of the Guinness Premiership rugby union tournament, but it had to pay £54m over four years just to share it with BSkyB.

And analysts generally agree that Setanta vastly overpaid in its £125m deal with the Scottish Premier League over five years - an agreement on which it missed a £3m payment last week.

Are there other options open to Setanta to continue?

One possibility is for Setanta to overhaul its entire business model.

Currently it sells mainly to retail customers - who pay specifically to receive the channel.

But it is understood that another option would be for it to become a wholesale supplier of programmes to firms such as BSkyB and BT Vision.

It already does this for Virgin Media, which makes Setanta channels available as part of its more expensive packages.

Setanta would probably receive less revenue this way than by selling directly.

But it would potentially be able to reach a wider market - thanks to the marketing power of the likes of BSkyB.

This business model would also allow Setanta save money - as it would not need marketing or customer services teams.

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